Water Markets, Privatization and Deregulation
Energy Expert To bring demand and supply into balance, water markets are necessary. Under a market system, prices are not regulated, but are determined by the free exchange of water rights. In most countries where water is scarce or costly to access, systems of rights for water have emerged either through custom or through laws and regulations. The rights define the amount of water to which the owner is entitled. With rights well defined, water markets allow owners to make better decisions about the water they use. They can decide for themselves whether to use the water or trade the right. The owner of the right may choose to use the water himself when the market price is low. In fact, if the price is low enough the owner may even decide to enter the market and purchase additional water. When prices are high, however, the owner may find it cost effective to conserve water and sell it. While water right markets are emerging all over the world, they are still in their infa...